Three years ago there was a lot of discussion about the data embedded in bitcoin transactions and the block space taken up by these OP_Return transactions. Recently, however, the use of OP_Return transactions has decreased significantly, and this trend has reduced network charges to some extent.
The dominance of OP_Return transactions is slowing considerably, which is reducing Bitcoin network fees
Over the past nine months since July 1, 2021, bitcoin transfer fees have dropped quite a bit. At the time, the average bitcoin (BTC) sending fee was over $10 per transaction. Statistics show that at the end of April 2022, the average commission for sending BTC is 0.000042 BTC or $1.62 per transfer. The report published this month by Galaxy Digital Research lead Alex Thorne explains a number of reasons why onchain transactions have become cheaper.
Thorne’s report explains a number of reasons for the decline in commissions, including the use of batch transaction processing, the rise of segregated witnesses (Segwit) and the use of the Lightning Network. Another trend that Thorne’s report highlights is the decline in OP_Return transactions. The researcher notes how the use of arbitrary data storage on the Bitcoin blockchain has increased dramatically since 2018, following the launch of Veriblock.
Recently, however, OP_Return transactions by companies such as Veriblock and Tether via Omni have declined. Galaxy Digital Research explains that most tether has moved away from the Omni Layer network, which uses OP_Return transactions, to alternative circuits. While Thorne’s report briefly mentions the surge in OP_Returns after Veriblock, it does not mention how controversial arbitrary data storage was in Bitcoin’s blockchain at the time.
Essentially, the transaction OP_Return is used to mark the output of a transaction, and users can mark about 80 bytes of null_data in the Bitcoin blockchain in a given transaction. Using Bitcoin cryptocurrency and null_data, numerous organizations have used it to write messages to the blockchain and commit important data. In late 2013 and into 2014, the use of OP_Return became increasingly popular and controversial. Nevertheless, through 2017 research shows that OP_Return transactions accounted for only less than 2% of transactions.
Current daily data shows that OP_Returns have declined recently, and this is very different from when Veriblock captured 57% of Bitcoin’s OP_Return outputs in 2019. Bitcoin supporters at the time were very concerned about people and organizations storing arbitrary data on the Bitcoin blockchain. In one articlepublished on December 11, 2020, discusses the “dominance” of OP_Return outputs in an article titled “The Impact of Omni and Veriblock on Bitcoin.”
In addition to Veriblock, Omni/Tether, Factom, Komodo, Blockstore, po.et, Chainx, and RSK were the primary publishers of OP_Return transactions between 2018 and December 2019. Currently, while many of these projects still exist, they are not producing as many OP_Return transactions as in the past. Of course, there is a chance that the use of OP_Return outputs dominating BTC transactions could happen again. While reports like Thorne’s study and current data show that the number of OP_Return transactions has declined, there is no clear explanation as to why this has happened.
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